Nigerians have been warned to brace themselves for a hike in the price of bread, a staple food on practically everyone’s table.
The producers claimed that their production costs had grown as a result of the federal government’s withdrawal of fuel subsidies and deregulation of the foreign exchange (forex) market.
Engr. Emmanuel Onuorah, President of the Premium Breadmakers Association of Nigeria (PBAN), revealed in an exclusive interview with Vanguard: “For us in the premium bread making, it is a mixed feeling laced with a feeling of déjà vu.”
He stated that the majority of baking components are imported, and that the fluctuation of the currency has increased the cost of clearing the goods.
According to Onuorah, “most of our baking ingredients are import dependent; ranging from wheat flour to Ascorbic Acid, Calcium Propionate, Yeast, bread softener, and so on.” The rise in the amount used for clearing as a result of the forex floating will almost probably lead to an increase in bread costs.
“The flour millers even wanted to use the floating exchange rate as an excuse to raise the price of wheat flour; if they did, the price of bread would rise significantly because we would pass on the cost.” Any increase in the price of bread now will almost likely result in a decline in sales and the closure of more bakeries.”
On the impact of the elimination of fuel subsidies, he stated, “We feel that the decision was hasty without a clear cut plan on how to mitigate the policy’s fallout on businesses and Nigerians.” The President announced the policy before considering how to deal with the fallout, which is akin to putting the wagon before the horse.
“The impact on my members was unexpected because our workers were unable to afford the astronomical increase in transportation costs, impeding production due to worker unavailability.”
“Some of our members have delivery vans that use fuel; this increased their delivery costs, which correlated with higher production costs and lower margins.” Our distributors employ delivery vehicles that use fuel as well, therefore it harmed their sales, resulting in a decline in our volumes.”
“The imposition of 7.5% VAT on diesel by the new government, the price shot up immediately, and this affected our production and sales negatively,” the bakers’ leader noted.